‘Buy American’ in stimulus package good idea, bad idea

The House included a Buy American provision in its economic stimulus program that sounds great on paper. But is it?

The rider would require that only American iron and steel be used in infrastructure projects funded by the stimulus.

Promote American steel-making sounds great, right?

But, I can’t see how this passes World Trade Organization scrutiny. (That’s not to say I’m a fan of the WTO, just reporting the issues.)

Compound that with the fact that sovereign wealth funds from China and the Arab world, among other places, are getting antsy about the possibility of being asked to take a haircut on their investments in U.S. investment banks as part of a “bad bank” idea, and the “Buy American” provision looks like an even tougher international sell.

The European Union has already threatened countermeasures, in shades of the Great Depression after the 1930 Smoot-Hawley tariff.

A better set of ideas would be to go after Chinese steel dumping while giving bidding bonus points to using U.S. steel without requiring it.

Chinese found guilty of dumping steel pipe

The Chinese have been found guilty of dumping steel pipe in a case brought against the country by six pipemakers and the Steelworkers union. The International Trade Commission ruled unanimously in favor, which opens the door for a variety of anti-dumping penalties of up to 701 percent should be imposed on Chinese imports of circular welded pipe, which is used in a variety of construction jobs, such as home plumbing and sprinkler systems.

I say “should be,” as opposed to the original story saying “will be,” as you never know with the Bush Administration, which had to be pushed and prodded for years before it would agree to officially treat China as a market economy subject to sanctions for violating trade agreements.

The pipe case is the first to clear all the government hurdles for the tariffs to go into effect. Last year, the Commerce Department imposed penalty tariffs on imports of Chinese glossy paper, but the trade body blocked the tariffs by ruling that the domestic industry had not proven it was being materially harmed by the imports.

Some Congressional Democrats are talking about making it easier to file similar such suits.